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Woodside could move quickly in Canada

Kim Christian

Woodside Petroleum could be forced to move quickly on a growth project in Canada after agreeing a three-year land use deal.

The company has signed a land access agreement with the British Columbia government to conduct feasibility studies to build a liquefied natural gas (LNG) export facility at Grassy Point on the northwest coast of Canada.

"The agreement is for three years and is subject to Woodside meeting milestones, including making annual payments, obtaining an export licence and commencing environmental approvals processes," Woodside said in a statement on Thursday.

The Perth-based oil and gas giant said work had started on technical, economic and consultation activities to meet its obligations under the agreement.

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The company is still assessing the feasibility of building an LNG plant in Canada, a year after submitting an expression of interest.

Macquarie analyst Adrian Wood said the tight timeframe for land access would put pressure on the company to make a decision.

"That's certainly shorter than I was expecting and that will, perhaps, foster a greater sense of urgency than, perhaps, the market was expecting," Mr Wood told AAP.

"If it's going to go, it's going to go in the next three years."

He said Woodside's greater plan for the region was still unclear and a capital injection would not be required as yet.

The company has slated billions of dollars for two major growth projects, including the stalled Leviathan natural gas project deal in Israel.

In March, Woodside missed a deadline to seal the $US2.7 billion ($A2.92 billion) deal for a stake in Leviathan.

Woodside had intended to take a 25 per cent stake in the offshore project with an $US850 million up-front payment, but has not yet agreed on terms with the Israeli government.

The company and its joint venture partners are still in discussions about how profits would be taxed.

Meanwhile, Woodside said its second major growth project, Browse in northwestern Australia, will be in a position to consider entering front-end engineering and design (FEED) in the second half of 2014.

Mr Wood said the company had stopped making any material commentary around those growth projects in its quarterly releases.

"Leviathan very much hangs in the balance," Mr Wood said.

"It's very much too close to call either way and with Browse they're working towards going into FEED later in the year and that's still the plan."

Woodside also released figures showing production revenue for the March quarter was up 1.6 per cent on the previous three months, which was in line with expectations. It was up 15.9 per cent on the same period in 2013.

The company produced 23 million barrels of oil equivalent (MMBOE) during the March quarter, down 0.9 per cent on the last three months of 2013, but up five per cent compared to the same time a year ago.

Its shares were up 33 cents, or 0.83 per cent, to $39.92 at 1358 AEST.